Question 1

Measures to restrict imports into a country are known as _____________. Is it &#34;restrictionism&#34;? &#34;protectionism&#34;? &#34;recidivism&#34;?

Accepted Answer

Protectionism

Question 2

A limit on the number of imports into a country is known as a _____.

Accepted Answer

Quota

Question 3

Complete the sentence. In a customs union&#8230;&#10;A) There is freedom of movement of goods and services but not finance.&#10;B) There is free trade between members and each country determines its trade policy with non-members.&#10;C) There is free trade between members and a common trade policy with non-members.&#10;D) Member states determine their own policy towards each other.

Accepted Answer

In a customs union, member countries agree to allow free trade of goods among themselves and also agree to adopt a common external trade policy towards countries that are not members of the union. This means they negotiate as a single entity with external countries on tariffs and trade agreements.

Question 4

Which of the following statements about a tariff is true?&#10;A) It limits the quantity of products imported into an economy.&#10;B) It increases the sales of products from abroad in a country.&#10;C) It is a tax on foreign products.&#10;D) It occurs in a free trade area.

Accepted Answer

Tariffs are taxes imposed by a government on goods and services imported from other countries, which can make these goods more expensive and less competitive compared to domestic products.

Question 5

What does it mean if a country has a comparative advantage in the production of a product?&#10;A) It has a lower opportunity cost than rivals.&#10;B) It can produce more than rivals.&#10;C) It is charging more than rivals.&#10;D) It is subsidized by the government.

Accepted Answer

A comparative advantage means a country can produce a good at a lower opportunity cost than its trading partners, not necessarily that it can produce more of it.

Question 6

The opportunity cost of 1X in country A is 2Y; in country B it is 3Y; which of the following are possible terms of trade?&#10;A) 1X=2.5Y&#10;B) 1X=5Y&#10;C) 1X = 0.5 Y&#10;D) 1x= 1.2Y

Accepted Answer

The terms of trade must be between the opportunity costs of the two countries, which are 2Y and 3Y. Therefore, 1X=2.5Y is a possible term of trade.

Question 7

An increase in the exchange rate increases the prices of _________ in foreign currency all other things being equal

Accepted Answer

The answer of An increase in the exchange rate increases...

Question 8

Reasons for protectionism do NOT include&#10;A) Protecting infant industries&#10;B) Retaliating against other government's actions&#10;C) To protect strategic industries&#10;D) To help local businesses be more efficient with competitive pressure

Accepted Answer

Protectionism is typically aimed at shielding domestic industries from foreign competition, not at making local businesses more efficient through competitive pressure. The rationale is often to protect nascent or strategic industries, or to retaliate against trade practices deemed unfair by other countries, rather than to foster efficiency through competition.

Question 9

The principle of comparative advantage is based on ___________ cost

Accepted Answer

The answer of The principle of comparative advantage is based...

Question 10

Comparative advantage is based on the principle of:&#10;A) Opportunity cost&#10;B) Diseconomies of scale&#10;C) Allocative inefficiency&#10;D) Normative economics

Accepted Answer

Comparative advantage is based on the principle of opportunity cost, which refers to the cost of forgoing the next best alternative when making a decision. This concept is fundamental in explaining how and why countries engage in trade, by specializing in the production of goods for which they have the lowest opportunity cost.

Question 11

If a country can produce 300 units of X or 200 units of Y. The opportunity cost of 1X is:&#10;A) 200Y&#10;B) 1.5Y&#10;C) 0.67Y&#10;D) 1.6Y

Accepted Answer

The answer of If a country can produce 300 units...

Question 12

The worldwide organisation aimed at reducing protectionism has the initials:&#10;A) WTO&#10;B) CC&#10;C) BERR&#10;D) EU

Accepted Answer

The answer of The worldwide organisation aimed at reducing protectionism...

Question 13

If a government imposes a tariff, its revenue will increase most if the price elasticity of demand is:&#10;A) -0.1&#10;B) -0.01&#10;C) -1&#10;D) -5

Accepted Answer

The answer of If a government imposes a tariff, its...

Question 14

The opportunity cost of 1X in country A is 2Y; in country B it is 5Y. According to the theory of comparative advantage country A will export Ys to B

Accepted Answer

The answer of The opportunity cost of 1X in country...

Question 15

If countries specialise in the production of products where they have comparative advantage unit costs may fall even further due to __________________. Is it &#34;economies of scale&#34;? &#34;diseconomies of scale&#34;? &#34;&#34;over capacity&#34;?

Accepted Answer

The answer of If countries specialise in the production of...

Question 16

In the European Union each member country can set its own tariff against non members.

Accepted Answer

The answer of In the European Union each member country...

Question 17

A subsidy to exporters shifts the demand curve for these products to the right.

Accepted Answer

The answer of A subsidy to exporters shifts the demand...

Question 18

Free trade occurs when there are no transport costs.

Accepted Answer

The answer of Free trade occurs when there are no...

Question 19

A tariff usually leads to higher prices and a lower equilibrium quantity.

Accepted Answer

The answer of A tariff usually leads to higher prices...

Deck 13: Global Business